Development Finance
Development Finance is a short-term funding option designed specifically to assist with the purchase costs and builds costs associated with a residential or commercial development project.
Development Finance is often used by builders and developers planning extensive projects and ground-up developments. If approved, development finance can be used to cover both land purchase and building costs.
Unlike traditional mortgage lending that considers the value of the property, a development finance loan will consider the value of the completed property and the total development cost.
Most banks and lenders split Development Finance into two parts, and both can have very different approval processes, fees and charges, interest rates and risk assessments. They are:
- Residential Development Finance: Most banks and lenders define residential property development as smaller-scale development, generally up to four-unit builds. This kind of finance can have standard fees and charges and is the less risky of the two.
- Commercial Development Finance: If property development is generally greater than four or five residential units, banks and lenders are likely to characterize it as Commercial Property Development. This can be anything from a skyscraper to a series of commercial properties. These kinds of mortgage applications can often attract a higher establishment fee and interest rate.
If you would like more information on Development Finance, please contact the team at TFC today!